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The Natural Gas Blog

Peoples Gas to file for new natural gas base rates

Proposed rate reflects increased costs of providing gas service

TAMPA, June 12, 2008

Continued cost increases

President Bill Cantrell said, “Our Peoples Gas team has worked hard to offset the increased costs of providing high-quality natural gas service to a growing customer base. Unfortunately, we are unable to put off an adjustment any longer.”

If this request is approved, the average residential Peoples Gas bill is expected to increase by around 10 percent. Since its last base rate increase, the costs of doing business have increased significantly, including labor (22 percent) and steel pipe (90 percent).

Peoples Gas will file all details related to its proposal in 60 days. That filing will start an eight-month process during which the request for new base rates is considered by the FPSC, with new rates effective at its conclusion.

Environmental benefits

Since its last base rate increase in 2002, Peoples Gas has added approximately 100,000 new customers. To serve that new demand and address new federal requirements, the company has installed or replaced more than 1,500 miles of gas main in the more than 200 communities it serves throughout Florida.

According to Cantrell, continued expansion of natural gas service in Florida can provide many environmental benefits to the state.

“Typical residential customers replacing four less-efficient electric appliances with today’s highly-efficient natural gas appliances can reduce their home’s carbon footprint by as much as 4,000 pounds each year,” said Cantrell.

About natural gas rates

Base rate charges, addressed during a rate case, are used to cover the utility’s cost of building, operating and maintaining the infrastructure it uses to serve customers.

The fuel charge component of the bill, which is typically the largest component, is what is known as a “pass-through” cost and is not part of a base rate case. The fuel charge component is the cost, without any markup or profit, paid by Peoples Gas to its fuel suppliers. The fuel charge, which can be adjusted monthly to reflect actual and projected costs, is monitored and approved by the FPSC.

Energy efficiency programs

Peoples Gas serves approximately 334,000 customers in communities throughout Florida. It is the state’s largest natural gas provider with a safe, reliable distribution system of over 10,000 miles of gas main. In recent years, Peoples Gas has made it easier for homeowners and businesses to use energy efficient, domestically produced natural gas through enhanced energy efficiency programs and rebates for installation of natural gas service and high-efficiency natural gas appliances.

Rebates for replacing electric appliances with gas appliances include $625 for home heating and $525 for water heating. In total, more than 200,000 Peoples Gas customers have taken advantage of energy efficiency rebates since the inception of the company’s energy-saving initiatives in the early 1980s. For more information on the company’s energy efficiency programs, visit online: www.peoplesgas.com.

The FPSC will assign a docket number and will publish a schedule for the case approximately 10-14 days from today. Once documents relating to the case are filed, they will be available on the FPSC Web site at www.psc.state.fl.us or through a link on the Investors section of the TECO Energy Web site at www.tecoenergy.com.

Peoples Gas System, Florida’s largest natural gas distribution company, is one of the four core businesses of TECO Energy, Inc. (NYSE: TE), an energy-related holding company with regulated utility operations in Florida, including both Tampa Electric and Peoples Gas System. Peoples Gas serves approximately 334,000 customers in most of Florida’s major metropolitan areas and beyond. Other subsidiaries include TECO Coal, which owns and operates coal production facilities in Kentucky and Virginia, and TECO Guatemala, which is engaged in electric power generation and distribution and energy-related businesses in Guatemala.

Note: This press release contains forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions. Actual results may differ materially from those forecasted. The forecasted results are based on the company’s current expectations and assumptions, and the company does not undertake to update that information or any other information contained in this report, except as may be required by law. Additional information is contained under “Risk Factors” in TECO Energy, Inc.’s and Tampa Electric Company’s combined Annual Report on Form 10-K for the period ended Dec. 31, 2007.